The EPCG scheme allows the duty-free import of capital goods/machinery to produce high-quality export items. The Government of India has implemented the EPCG scheme to boost exports.
Therefore, the Government of India is providing you with work by granting you a zero-duty import. After the new equipment has been installed, your job is to boost export sales compared to the company’s performance before the upgrade.
The government of your country has tasked you with a duty or task known as an export responsibility. There is no opting out of the export requirement imposed by the EPCG scheme. If an exporter fails to meet their export quota, DGFT might penalize them.
The Export Obligation duration of the EPCG Scheme is six years. The only way for the licensee to satisfy the Export Obligation is to ship products made with the authorized equipment overseas. It is not possible to fulfill the export quota by shipping any other products outside of those listed on the EPCG License.
Direct export, third-party export, or presumed export are all acceptable methods for satisfying the export obligation. By the 30th of April of each year, the EPCG Authorization holder must submit a hard copy report to DGFT RA detailing the previous year’s compliance with the Export Obligation.
Only when EPCG License information is included on shipping documents that include references to Advance Authorization, DFIA, MEIS, or any other reward scheme will the shipment be considered to have satisfied an export obligation.
There are two categories of Export Obligation under the EPCG Scheme: Let’s go down the many Export Obligation periods that exist.
To meet the requirements of the Specific Export Obligation, an exporter has six years from the date their EPCG license was issued to export several goods which is six times the actual duty savings amount.